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Fire Sprinkler Industry Looks Back and Ahead

As the fire sprinkler industry settles into 2018, it’s an opportunity to look back on business in 2017 and look ahead to the coming year’s potential. While forecasters predicted 2017 to be a year of slow growth with a bigger jump in 2018, it seems the period of slow and steady will continue. According to Engineering News Record (ENR), Dodge Data & Analytics reports that total U.S. construction starts grew 4 percent in 2017 and predicts U.S. construction starts will advance 3 percent to $765.2 billion in 2018. FMI Corp., Raleigh, North Carolina, focuses on construction put-in-place and calls for 5.2 percent growth to $1.3 trillion in 2018, after a reported 4.3 percent rate in 2017.

In the commercial sector, Dodge is expecting 2 percent growth in 2018. Retail construction has slowed, due to the increase in online shopping. However, that has brought on increased warehouse construction, projected to grow 4 percent in 2018. Institutional building should increase 3 percent and educational facilities 11 percent. Manufacturing construction is expected to decline 1 percent this year, and public works to grow just 3 percent.

FMI forecasts non-residential building will be soft in 2018 with manufacturing growth at 7 percent and educational building markets at 2 percent. The office building market is expected to grow 9 percent, and commercial building construction 10 percent.

Three out of the six U.S. regions are forecast to grow again in 2018 – the West, South Central and South Atlantic regions, Dodge Data & Analytics reports. The strongest growth will be in the South Central region, which is projected to increase 11 percent in 2018, after declining 2 percent in 2017.

Sprinkler Age surveyed several AFSA members across the country to report on business in 2017 and their forecasts for 2018. Most respondents had a busy year and anticipate continued or growth in the coming year.

Looking Back, Forging Ahead Overall, the members surveyed had a good year in 2017. While some areas started off slow, business picked up by the end of the year. Parks Moore, president of S & S Sprinkler Co., LLC, Mobile, Alabama, and AFSA Region 2 Director Don Kaufman, president of Kaufman Fire Protection, Albuquerque, New Mexico, both reported a slow start last year.

“Overall, business was good,” Moore says. “The first half of the year was slow, but the second half picked up considerably and we are very busy now.” He says that the initial outlook for 2018 is “promising.”

“We have a strong pipeline and some good projects are coming out for bid and will start work later in the year,” Moore comments.

Kaufman says that the year started out “very slow,” but by the end of the year, the company had work. He also says they have work going into next year.

Across the country in Connecticut, Central Connecticut Fire Protection in Meriden had a “slight increase” over 2016, says president Bob Hollis. He says that “going into 2018, our backlog of work is better than the previous few years.”

Business was good in other states including: California, Florida, Maryland, Michigan, and South Carolina. Chris Johnson, president of Piper Fire Protection, Clearwater, Florida, and AFSA Florida Chapter president, says that “business has been strong on Florida’s West Coast for the last three years or so. Currently, we are seeing a flurry of large construction projects in the Greater Tampa Bay market.”

Johnson continues; “For 2018, we expect to have a similar year to 2017 with slightly higher margins overall. Piper Fire is still taking work, but targeting projects starting the latter half of the year.”

Doug Irvine, Jr., president of Brigade Fire Protection, Belmont, Michigan, states that business was “overall good. We saw about a 10 percent increase over 2016. 2018 has all the signs of being another good year.”

“There seems to be a lot of opportunities and we think 2018 will be good,” he says.

South Carolina experienced a similar level of work, as Paul Hensley, president Advanced Fire Protection, Inc., Travelers Rest, reports: “business was good in the Carolinas this year.”

Hensley says that there are a lot of projects out for bids, so “it looks like it will remain good for 2018.”

California had a banner year in 2017 gauging contractor perspectives in both the northern and southern portions of the state. John Gonsalves, president of A & D Fire Protection, San Diego, says “business was great with another solid year. We were very busy.”

The year ahead “looks to be just as good a year, it may be a little slower taking off, but there are lots of potential projects and should even out,” Gonsalves comments.

AFSA Chairman of the Board Wayne Weisz and brother Byron, co-owners of Cen-Cal Fire Systems, Inc., Lodi, both report that 2017 was “very busy.” Wayne notes that they are experiencing growth in both commercial and residential construction in the state. Both say that 2018 looks to be another “very good year” with a nice backlog.

Included in this year’s survey were the newly formed AFSA Alberta and Vancouver Chapters in Canada. Alan Thompson, president of A.R.T. Fire Protection, Inc., Chilliwack, British Columbia, and president of the Vancouver Chapter, says business was “very good” in 2017 and that the market is strong in British Columbia. He says business for 2018 looks “very good with a lot of new construction happening.”

Kevin Mozak, president of Meridian Fire Protection, Inc, Edmonton, Alberta, and Alberta Chapter president, report that business was slow in the first half of 2017, but the second half saw an increase. “Overall, from last year to this year we will be up 10 percent. Business is looking good for 2018 as we have already secured some new construction/renovation work.”

Potential Roadblocks in 2018 Skilled labor and worker shortages continue to be a problem for the industry, as those are the top reported concerns from members each year.

Wayne Weisz concurs. “Skilled labor is always an issue – we’re short of skilled labor.” He believes that training is key to growing a future workforce and that AFSA excels in apprenticeship training with its program developed by merit-shop contractors for merit-shop contractors.

“From inception through years of rewrites and code updates to today, AFSA’s Fire Sprinkler Fitter Apprenticeship Training program has moved to the forefront of apprenticeship training within our industry,” he states in this issue’s Chairman’s Message (see page 6 for more details).

Mathias finds that “hiring experienced installers and designers seems to be a continuing challenge,” and Kaufman notes that “the manpower for all areas of the job will have problems – designers, project managers, sales personnel.”

Even in Canada, Thompson notes that in a thriving market such as Vancouver, British Columbia, qualified manpower can be a potential drawback. Mozak has found similar challenges in the Edmonton, Alberta area.

Irvine also comments that labor, both in the office and field, continues “to be our biggest hindrance to growth. More training and awareness at a younger level would definitely help our industry.”

Johnson notes that in Florida the labor market has become extremely competitive over the past two years and that they expect it to continue well into 2019. One of their efforts to counter this has been working with area school districts.

“We are seeing efforts to engage school systems locally with opportunities for high school-aged students to enter the fire sprinkler labor market straight out of school beginning to pay dividends,” Johnson says. “We have been able to steadily add quality young adults, but only because of steady engagement with our local school systems.”

In California, Gonsalves is also focused on recruiting and growing his skilled labor workforce. In addition, contractors in the state must keep up with newly established fitter licensing laws. (See related story in the November/December 2017 issue of Sprinkler Age, page 38.)

Byron Weisz comments that “labor will be an issue in all of the building trades.” He also notes that hurricanes, wildfires, and other natural disasters have placed an extra burden on the labor force.

Housing Market The National Association of Home Builders (NAHB) predicts that single-family housing starts will reach 903,000 in 2018 (a 7.5 percent gain), increasing from an estimated 840,000 in 2017. It also predicts the slowdown in multi-family housing will continue over the next two years with a 1.7 percent drop in 2018. Dodge predicts single-family housing starts next year with a 9 percent boost thanks to older millennials entering the housing market. However, it predicts the multi-family housing sector to drop 8 percent in starts in 2018. FMI’s construction put-in-place forecasts 7.5 percent rate of growth in single-family residential and 4.5 percent rise in multi-family residential.

Contractors around the country seem to be busy with a variety of residential projects. In San Diego, Gonsalves reports there has been “solid residential activity for a few years now. It’s pretty consistent but not much in the NFPA 13D [Standard for the Installation of Sprinkler Systems in One- and Two-Family Dwellings and Manufactured Homes] area.”

Wayne Weisz concurs for the Northern California area. “We are going through a big increase in the amount of single-family homes built, not only in our area but throughout Northern California.” Byron Weisz adds that there was a housing crisis going on before wildfires destroyed thousands of homes in the state, and both single- and multi-family projects were abundant throughout the West Coast.

Irvine has seen an “increase in multi-family/high-rise work but not on single-family” in the Grand Rapids area. We do less than six NFPA 13D jobs per year,” he continues. “I see the residential/multi-family slowing down here.”

Chris Johnson in Florida has “definitely seen increase in residential activity” in his market. “There is a flurry of high-rise work currently in many downtown areas. In addition, other dense residential work has remained steady over the past three years.”

In Maryland, Dan Mathias notes that residential has been strong for the last couple of years. He adds that his company installs sprinklers in all types of residential occupancies “from custom homes to senior apartments.”

Bob Hollis in Connecticut comments that they have increased their NFPA 13D installations slightly year-by-year in the past five years, but the volume is a very small percentage of their total work.

Parks Moore reports that “residential demand has picked up some but our state [Alabama] does not enforce the IRC requirement for sprinklers in new single-family homes.”

Multi-family work is increasing in New Mexico, according to Kaufman. “NFPA 13D is a small market for this state but we get our share,” he notes.

In Canada, Thompson reports that Authorities Having Jurisdiction (AHJs) and area fire departments are starting to implement the installation of sprinkler in residential homes. Mozak says that they saw a decrease in residential homes in 2017, but in 2018 they are projecting an increase in residential condominiums.

Retrofit Activity Retrofit work appears to be steady around the country and in Canada. Kaufman reports it makes up “about 50 percent” of his workload. Others such as Parks Moore say there is “plenty” of retrofit work to be done, and Mathias comments that there are “lots of opportunities as building codes require sprinklers for many occupancies.” Doug Irvine says they are doing quite a bit of retrofit and upgrade work in “all types of construction and uses.”

In Southern California, Gonsalves doesn’t see a huge market but says there are always a few projects going on and that is a “small percentage of volume” for his company. The Weisz brothers are seeing a “fair amount of density upgrades in commercial buildings” and that with “codes and insurance requirements changing, there are always retrofit opportunities,” but that they do not work a lot of retrofit projects.

Chris Johnson reports that “retrofit activity has largely stalled within the markets that we operate. There has been continuing pressure from the Florida legislature to roll back or weaken high-rise retrofit requirements that have been on the books for years. Our governor joined the previous two governors in vetoing efforts to repeal the high-rise retrofit laws.”

He continues: “We are thankful that our state’s executive branch and State Fire Marshal’s Office understand how important fire sprinklers are to keep our citizens safe and ensure a strong tourism industry in our state. We believe that the condos that have not complied with the deadlines locally are waiting for local enforcement to pressure them into compliance.”

Bob Hollis notes that there seem to be many buildings throughout Connecticut that are finally being rehabilitated/retrofitted.

M/S Perspective Members of AFSA’s Manufacturers/Suppliers (M/S) Council gave a healthy report from the associate member side of the fire sprinkler industry. Council Chairman Mike Dooley, vice president of sales for FlexHead Industries in Holliston, Massachusetts, spoke with several Council members who reported a healthy increase in business in 2017 compared to 2016.

“Depending on the product supplied to the fire sprinkler industry, increases in sales were between 5 and 9 percent,” Dooley says.

He also reports that the Council’s outlook for 2018 is “optimistic, based on current construction activity, low interest rates, and a growing economy. The AIA Architect Billing Index (ABI) reported that the November 2017 index reached a level of 55, which was the highest index of 2017 forecasting increased construction activity in 2018.”

M/S Council Vice Chairman Chris Stason, western divisional manager – fire protection for Victaulic Company, Temecula, California, says that “2017 was a good year across the entire company. Construction was strong in all markets. 2018 is going to start right where 2017 finished, on a high note. We have several large-scale projects already booked and are tracking others.”

Some potential problems in 2018 from the M/S perspective are “the shortage of skilled labor available to construction firms and the shortage of fire sprinkler fitters and fire sprinkler designers.” He also states that political issues in Washington D.C. could “potentially be disruptive to the economy.”

Stason notes that “it appears the biggest slow down for contractors is trained manpower for design/engineering and qualified field labor. Also, the live/work/play-type facilities have been on a rapid growth pattern. Millennials love to live in inner-city environments and residential construction is trying to keep up.”

Council members report that residential fire sprinkler activity is “strong and growing, especially in fire sprinkler friendly states like California, Florida, Maryland, Texas, and the Southeastern U.S. The installation of CPVC in residential fire sprinklers is very strong and a strong 2018 is forecast.”

Legislative Arena The passage of H.R. 1, Tax Cuts and Jobs Act, is a comprehensive reform of the U.S. tax code. H.R. 1 provides this important incentive and allows the cost of sprinkler retrofits to be deducted as a Section 179 expense. AFSA members are poised to benefit from several aspects of this monumental legislation, including particular language that directly affects the fire sprinkler industry – incentivizing business owners to retrofit their properties with fire sprinkler systems. (See page 40 of this issue for details.)

In other legislative news, Byron Weisz notes that California already requires fire sprinklers to be installed in new residential homes and commercial buildings. In addition, “the state is trying to implement a fitter certification program which will be interesting to watch evolve.” (See the November/December 2017 issue of Sprinkler Age for more information on California fitter licensing.)

Doug Irvine reports that “the city of Grand Rapids is talking about legislation regarding sprinklers but not as a whole throughout the state of Michigan.”

In Florida, Chris Johnson says that the homebuilders’ associations have made several attempts to weaken the fire sprinkler industry over the past two years. “Currently, homebuilders are holding several key positions in the Florida Legislature leadership. We are fighting to keep our representation on the Florida Building Commission.”

He continues: “There are efforts to change the makeup of that commission to cut the board membership in half with changes in some of the seats to help the homebuilders’ cause in keeping fire sprinkler requirements out of the Florida Building Code for single-family homes in particular. We have strong support from associations such as Associated Builders and Contractors (ABC) and the Florida Fire Marshals and Inspectors Association. We hope that our recent hurricane will help combat attempts to further weaken Florida’s Building Code.”

In Connecticut, Bob Hollis notes that the requirement to protect town houses is moving forward through the code revisions.

Parks Moore reports that in Alabama, the state legislature passed a bill in 2017 allowing licensed plumbers to install multi-purpose sprinkler systems in single-family homes if they are licensed and certified by the state fire marshal.

New Year, New Outlook It looks to be a busy year ahead for the fire sprinkler industry and the members surveyed are optimistic.

“The sprinkler market is a fast-growing industry and we continue to have plenty of work for all contractors,” notes Mozak.

“I think I speak for my entire team at Piper Fire and the Florida Chapter in that we are proud to work in such a fantastic industry,” comments Johnson. “We are thrilled to have the opportunity to lobby and advocate for fire sprinklers at the local, state, and national level. We are excited to see what the future holds for our industry from 2018 and beyond.”

Vancouver Chapter President Alan Thompson echoes that sentiment. “We are excited for 2018 as it will be our first full year as an AFSA chapter. We are looking forward to seeing our chapter grow as new members join and we are able to take advantage of the AFSA membership benefits and opportunities.”

As the fire sprinkler industry and acceptance of residential fire sprinkler systems grow, look to AFSA to provide the training, programs, services, connections, and resources merit-shop contractors can utilize to succeed well into the future. Visit firesprinkler.org for all the details on what your association offers. With AFSA by your side, you can make 2018 the best year you’ve ever seen!